Intel INTC is scheduled to report third-quarter 2019 results on Oct 24.
The chipmaker’s third-quarter top line is expected to have benefited from solid momentum of its latest high performance Xeon processors.
Nonetheless, softness in NAND pricing and sluggishness in data center demand are anticipated to reflect on the third-quarter performance.
Click here to know how the company’s overall third-quarter performance is expected to be.
Factors Likely to Impact Q3
CCG in Focus: Intel’s PC-centric business is represented by this segment. Notably, Intel bundles PCs, notebooks, 2-in-1s, tablets and other computing devices under the Client Computing Group or CCG segment.
Management anticipates PC centric part of the business to be down in mid-single digits primarily owing to deteriorating ASPs including products with lower core count.
Markedly, the Zacks Consensus Estimate for CCG is presently pegged at $9.625 billion, indicating a decline of almost 6% from the year-ago reported figure. Further, the consensus estimate for CCG-Platform revenues is pegged at $8.708 billion, indicating a decline of 3.5% from the year-ago reported figure.
Nonetheless, incremental adoption of the latest processors and improving trend in PC shipments is likely to have aided CCG segment’s third-quarter performance. Moreover, deal wins from Microsoft MSFT, Google, among others, are anticipated to get reflected in the third-quarter performance.
Intel Corporation Revenue (Quarterly)
Intel Corporation revenue-quarterly | Intel Corporation Quote
Data-Centric Business Deserves a Special Mention
Intel expects Data Center Group (DCG) performance to improve in the second-half of 2019. Notably, DCG, Internet of Things Group (IOTG), Non-Volatile Memory Solutions or NSG, Programmable Solutions Group (PSG), Mobileye and All Other business units form the crux of Intel’s data-centric business model.
Rise in demand from communication service providers and strength in Xeon ASPs are likely to have aided DCG revenues in the quarter under review.
However, lower demand from enterprise and government verticals and weakness in memory business are likely to have affected DCG segmental performance.
Moreover, stiff competition from AMD AMD and Xilinx XLNX is likely to have created pricing pressure and limited margin expansion. In a bid to maintain its competitive position and improve ASPs, Intel is increasing investments on infrastructure, product development and platform. These are likely to have affected the company’s third-quarter results.
Markedly, the Zacks Consensus Estimate for DCG revenues currently stands at $5.569 billion, indicating a decline of 9.3% from the year-ago quarter.
Meanwhile, PSG segment is expected to report growth in the third quarter. The Zacks Consensus Estimate for PSG revenues currently stands at $516 million, indicating year-over-year growth of 4%. Strength in 5G wireless domain and adoption of advanced 28nm-based products are likely to have positively impacted the segment.
Further, Mobileye’s new ADAS wins and increasing proliferation of IoT are anticipated to have contributed to Intel’s IoT businesses.
However, weakness in memory vertical owing to anticipated softness in NAND pricing is anticipated to get reflected in NSG segment performance.
Markedly, the Zacks Consensus Estimate for NSG revenues currently stands at $976 million, indicating year-over-year decline of 12.5%.
Currently, Intel carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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